Reverse Mortgage For Purchase Coming Soon

December 11th, 2008 | by admin Published in News, Reverse Mortgage | 6 Comments

HeraldNet journalist Tom Kelly writes about the one of the most exciting parts of HERA in Program allows reverse mortgage for a purchase. The new HECM for purchase program becomes active January 1st, 2009 and allows homeowners to use a HECM to purchase a new home.

"The HECM for purchase will give seniors several more options," said Sarah Hulbert, president of Senior Financial Corp,a reverse mortgage lender. "I think one of the key aspects is that they can stay more liquid. They do not have to reinvest all of their funds into their new home before getting the reverse mortgage, freeing up more cash for other uses."

Seniors can use the program to purchase 1-to-4 unit single-family homes, condos, and manufactured homes built after June 15th 1976 that meet HUD’s permanent foundation guidelines.

"I think you will see the typical purchaser for a home equity conversion mortgage will be the move-down buyer — perhaps headed to the sunshine," said former Puget Sound resident Ken Keranen, who now originates reverse mortgages for Seniors Reverse Mortgage in Carlsbad, California.

The only challenge seniors now face in this slow market is finding a willing buyer to purchase their present home so they can "move down" via a reverse mortgage. After all, you have to sell your primary residence before you can buy another one.

Program allows reverse mortgage for a purchase

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TexasCowboy

I truly hope Seniors fully investigate the reverse mortgage option. While it is very beneficial to some, it may also not be for others. My fear, especially given the unscrupulous acts of mortgage companies, is that Seniors are not drawn in on false pretenses.
Also, with declining home values, Seniors should be aware this may not be the best time to engage in a reverse mortgage.
Nice article!

Question_Mark

Many others have said it before but one help this becomes is an elimination of some of the duplicated closing costs by having one combined transaction versus two (purchase then refinance).

To date, there appears to be no one who has addressed the need for contingencies on the purchase escrow for obtaining a HECM (particularly a fixed HECM) at specified terms. If the rate goes up and all funds were needed in the transaction, well, you get the idea.

Question_Mark

Hey Cowboy,

It seems there is someone more cynical and he's from Texas. You are going to force me to change my name.

To avoid some of the concerns you express, seniors are required to get counseling. Unlike the annuity issue, one would hope that counselors would be capable of "heading off" some of your concerns "at the pass".

But I fully agree, seniors need to investigate and be fully engaged in the entire HECM process. So do their advisors.

While declining values are a problem, it may be the best time to buy. We just have to hope that the counselors will be fully prepared to address these issues come January 1 and originators do not abuse the new program.

Vincent Navarro

While it is true that abuses will happen in ANY form of lending, it's important to note that with the oversight of federally approved counselors and ridgid oversight by HUD of approved lenders the senior enjoys a few layers of protection.As history has shown time and again, money is never made on the sale but when the purchase is made. It would be senseless for the senior emerging from a "white elephant" of a bigger home to be denied the benefits of the reverse program because they want to purchase a smaller more managable home. And to be frozen by fear or ignorance do to a "sky is falling" mentality is even more foolish.

Bob Libby

I would like to make one correction to Mr.Kelly's article. It is not neccesary to to sell one's home before using the HECM to purchase a new home. The buyer has 60 days from closing to occupy the new residence. I see this as a way for people to buy a home they like before they sell their prior residence.

It's a Wonderful Life

I don't understand Texas's Cowboys statement concerning declining values, if the property’s value is expected to decline then why would you not want to do the deal now ?

Not only do you lock in a higher value but you also start the clock on the automatic 4 % increase in the line amount which will most likely beat any possible increased appreciation for the next few years.

hald2

My wife has a reverse mortgage on her home prior to our marriage. The bank says to put my name on the loan we would have to refinance and would have to come with $15,000. Is there any lendors or banks that buy active reverse mortgages so I can get my name on the loan without huge outlay of cash?

Reverse Mortgage For Purchase Coming Soon

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